RASIPURAM VIVEKANANDA EDUCATIONAL TRUST,RASIPURAM vs. ITO, EXEMPTION WARD,, SALEM

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ITA 1071/CHNY/2025Status: DisposedITAT Chennai04 July 2025AY 2021-224 pages

In favour of the assessee: the assessee's appeal was allowed. From the AI summary of this appeal.

AI SummaryAllowed

What did the Tribunal hold?

The Tribunal held that the action of the Ld.CIT(A) in enhancing the income of the assessee without providing an opportunity of being heard was a violation of the principles of natural justice and statutory provisions. The Tribunal noted that Section 251 of the Income Tax Act, 1961, mandates that the Ld.CIT(A) must give notice of enhancement and provide an opportunity to the assessee before making any direction for enhancement. Since the impugned directions by the Ld.CIT(A) amounted to an enhancement, the Tribunal found that the prescribed procedure under Section 251 was not followed. This failure was considered an arbitrary action. Consequently, the Tribunal set aside both impugned orders and restored the appeals back to the file of the Ld.CIT(A). The Ld.CIT(A) is directed to decide the grounds of appeal in accordance with law after hearing the assessee, who is also directed to file all relevant documents and written submissions. The appeals were allowed for statistical purposes.

What were the facts?

The assessee, Rasipuram Vivekananda Educational Trust, filed appeals against the orders of the Learned Commissioner of Income Tax (Appeals)/Addl/JCIT(A)-3, Mumbai, for Assessment Years (AY) 2019-20 and 2021-22. The appeals were filed with a delay of 48 days, which was condoned by the Tribunal. The common issue in both appeals pertains to the disallowance of exemption claimed under Section 11 of the Income Tax Act, 1961. For AY 2019-20, the disallowance was to the extent of Rs. 22,00,000, and for AY 2021-22, it was Rs. 28,28,783. The assessee trust is registered under Section 12A. The return for AY 2019-20 was processed under Section 143(1) by the CPC, computing total income at Rs. 22 lakhs. The Ld.CIT(A) directed the AO to assess the net income after verifying expenditure, which the assessee argued was not an issue before the Ld.CIT(A).

What were the issues?

1. Whether the Learned Commissioner of Income Tax (Appeals) acted in accordance with law by enhancing the income of the assessee without following the procedure laid down in Section 251 of the Income Tax Act, 1961, particularly by not providing an opportunity of being heard to the assessee before making such enhancement? The assessee contended that the Ld.CIT(A)'s action amounted to an enhancement of income from Rs. 22,00,000 to Rs. 1,42,20,740 for AY 2019-20 and from Rs. 28,28,783 to Rs. 91,96,797 for AY 2021-22. The assessee argued that if the Ld.CIT(A) intended to enhance the income, the procedure under Section 251 of the Act, requiring an opportunity to be given to the assessee, should have been followed. The assessee asserted that this procedure was not followed, making the Ld.CIT(A)'s action bad in law. The revenue did not rebut the submission made by the assessee.

Which sections of the Income-tax Act were involved?

Section 11,Section 251,Section 12A,Section 143(1)

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, ‘B’ BENCH: CHENNAI

Before: SHRI ABY T. VARKEY & SHRI JAGADISH

Pronounced: 04.07.2025

आदेश / O R D E R PER ABY T. VARKEY, JM: These are appeals preferred by the assessee Trust against the separate orders of the Learned Commissioner of Income Tax (Appeals)/Addl/JCIT(A)-3, Mumbai, (hereinafter referred to as “the Ld.CIT(A)”), dated 31.12.2024 for the Assessment Year (hereinafter referred to as "AY”) 2019-20 & 2021-22.

& 1071/Chny/2025 (AYs 2019-20 & 2021-22) Rasipuram Vivekananda Educational Trust :: 2 ::

2.

At the outset, the Ld.AR of the assessee brought to our notice that there is a delay of ‘48’ days in filing of the appeals and filed application for condonation of delay along with the affidavit. A perusal of the contents of it, we are convinced that there was sufficient cause for condonation of delay and therefore, we condone the delay and proceed to hear the appeals on its merits.

3.

The Ld.AR for the assessee brought to our notice that the common issue involved in both the appeals is disallowance of exemption claimed u/s.11 of the Income Tax Act, 1961 (hereinafter referred to as ‘the Act‘)

1.

to the extent of Rs.22,00,000/- for AY 2019-20 and Rs.28,28,783/- for AY 2021-22. Since both the issues are similar/identical, therefore, the appeal for AY 2019-20 is taken as the lead case and the result of which will be followed for AY 2021-22.

4.

The assessee trust is registered u/s.12A of the Act and the return of income (RoI) for AY 2019-20 was processed by the CPC u/s.143(1) of the Act dated 18.05.2020 computing the total income at Rs.22 lakhs which was challenged before the Ld.CIT(A) who has disposed of the appeals by passing the impugned order by which he has directed the AO to assess the net income of the assessee-Trust after verifying the quantum expenditure claimed by the assessee which issue according to the Ld.AR & 1071/Chny/2025 (AYs 2019-20 & 2021-22) Rasipuram Vivekananda Educational Trust was not before the First Appellate Authority and to demonstrate that he drew our attention to the chart which is reproduced as under:

1.

Income to be Assessed Assessment Income Assessed as per Gross receipts Income as per Year Returned the order of 143(1) CIT(A) 2019-20 NIL Rs.6,57,69,115/- Rs.22,00,000/- Rs.1,42,20,740/- 2021-22 Rs.3,25,440/- Rs.3,14,36,423/- Rs.28,28,783/- Rs.91,96,797/-

5.

According to the Ld.AR, from the aforesaid chart it is discernable that for AY 2019-20 the action of the Ld.CIT(A) would tantamount to enhancement of income from Rs.22 lakhs to Rs.1,42,20,740/- and likewise for AY 2021-22, it would enhance from Rs.28,28,783/- to Rs.91,96,797/-. In such a scenario, according to Ld AR, if the Ld.CIT(A) desired to enhance the income of the assessee, the Ld. appellate authority should have followed the procedure laid down in section 251 of the Act i.e. by giving an opportunity to the assessee before making such enhancement which procedure was not followed in this case by the first appellate authority. Therefore, according to the Ld.AR, action of the Ld.CIT(A) is bad in law. On this submission of assessee, the Ld.DR couldn’t rebut the same. In such a scenario, we are of the view that there is per-se violation of principles of natural justice as well as violation of statutory provisions i.e. sec.251 of the Act, wherein there is a clear mandate given to the Ld.CIT(A) to give notice of enhancement and only after giving opportunity to the assessee, the Ld.CIT(A) could have given & 1071/Chny/2025 (AYs 2019-20 & 2021-22) Rasipuram Vivekananda Educational Trust any direction for enhancement. And since, the impugned directions given by the Ld.CIT(A) tantamounts to enhancement, we are of the view that Ld CIT(A) ought to have followed the procedure prescribed in section 251 of the Act, failure of it amounts to arbitrary action and therefore, we are inclined to set aside both the impugned orders and restore the appeals back to the file of the Ld.CIT(A) to decide the grounds of appeal raised by the assessee in accordance to law after hearing the assessee. The assessee is directed to file all relevant documents/written submissions required for adjudication with respect to both the appeals.

6.

In the result, appeals filed by the assessee are allowed for statistical purposes.

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